Subhead typeface Arial Regular 16pt with 32pt leading Subhead typeface Presentation Arial Regular 16pt with to 32pt leading Standing Committee on Finance 19 August 2014 1
GEPF TEAM Dr Renosi Mokate Mr Prabir Badal Ms Joelene Moodley Mr Hemal Naran Ms Adri Van Niekerk Chairperson Vice Chairperson Acting Principal Executive Officer Head: Investment and Actuarial Head: Secretariat 2 2
Governance: the law GEPF is a juristic entity established under the Government Employees Pension Law, 1996 (GEP Law) and is independent of government. GEPF aligns itself with the good governance principles embodied in the Pension Fund Act 24, 1956 and Public Finance Management Act 1, 1999. GEPF provides pensions and other related benefits as determined under the GEP Law to members and pensioners and their beneficiaries. Executive authority is vested in the Board of Trustees. 3 3
Governance: what GEPF is GEPF manages and administers pensions and other benefits for government employees in South Africa. GEPF receives member contributions from 708 participating employers including all national and provincial government departments and the South African National Defence Force GEPF has more than 1 279 000 active members and more than 391 000 pensioners and beneficiaries total more than 1.6-million GEPF is a defined benefit fund and is the largest pension fund in Africa with assets under management worth more than R1.4-trillion (unaudited) Government is GEPF s main guarantor 4 4
Governance: Powers & Functions The Board of Trustees is guided by the GEP law and rules: Investment of all the assets of the Fund according to an investment policy developed in consultation with the Minister of Finance (Section 6 (7)) Effective and efficient administration of the Fund (Section 7) Financial Reporting and audit arrangements (Section 9 & 10) Transitional arrangements and transfers between funds (Section 14) Funding level of the Fund (Section 17) 5 5
Governance: Powers & Functions Management of the benefit structure and all related rules (Sections 20 24) Dissolution of the Fund (Section 33) Management of financial arrangements: Pension increases, review of contribution rates, actuarial valuations, etc. Communication to and education of members and pensioners To act in the best interests of the beneficiaries and members 6 6
Governance: Board of Trustees GEPF is governed and managed by a Board of Trustees comprising 16 members Eight employer nominees Six employee nominees One Statutory Forces elect One pensioner elect 7 7
Board Governance Framework Board of Trustees Benefits & Administration Committee (BA-C) Finance & Audit Committee (FA-C) Governance & Legal Committee (GL-C) Investment Committee (INV-C) Independent Remuneration Committee REMCO Impairment Committee 8
Governance: vision, mission, and values Vision To be a role model for pension funds worldwide Mission Ensure the timely and efficient delivery of the benefits provided in the rules, and protect pensions against inflation to the maximum extent affordable, while maintaining the financial soundness of the Fund Invest responsibly by engaging with organizations in which we invest to encourage good governance, social equity and sound environmental practices Empower our members, pensioners and other stakeholders through adequate communication Champion retirement industry initiatives. Values We value honesty, transparency, empathy, professionalism, and innovation. 9 9
Strategy 10 10
Strategic Objectives To remain a leader in Responsible Investing Develop capability to be a one-stop financial services platform offering members and pensioners improved and flexible benefits Optimize the fund structure in terms of governance and benefits offered to members Be the employer of choice Establish and maintain credibility with stakeholders 11 11
Strategy: objective one Remain a leader in responsible investing Responsible investment implementation framework Continue to align GEPF assets to outperform liabilities Developmental investment framework Implementation across public and unlisted investments Engage companies on ESG issues 12 12
Strategy: objective two One-stop service provider that offers members and pensioners improved benefits Align benefits offered (PFA) Research Benefit enhancement to pensioners and members Consult stakeholder to enable implementation of Additional Voluntary Contribution and Preservation Fund 13 13
Strategy: objective three Optimize the Fund s Governance Structure Governance charter Enhance oversight Risk Management Ensure local and international best practice all governance processes in the fund Development and implementation of ethics programme Training and development 14 14
Strategy: objective four Employer of Choice Working environment Attract, Retain and Reward Performance driven and values based culture Roll out change management processes Implementation of the skills audit 15 15
Strategy: objective five Establish and maintain credibility with stakeholders Brand Management Membership Communication Issues Management Stakeholder Relations Corporate Identity Reputation Management Roadshows Retirement Member Campaigns Mobile offices Newsletters Dedicated Call centre Fraud Hotline Governance structures Stakeholder engagement 16 16
Strategic Partnerships: GPAA and PIC 17
Partnerships: GPAA The Government Pensions Administration Agency (GPAA) provides GEPF with: o admitting new members; o collecting member contributions; o maintaining members beneficiaries; o processing member benefits and o fund accounting. GEPF s relationship with GPAA is governed by formal administration and service level agreements. 18 18
Partnerships: GPAA Members and pensioners experience GEPF through GPAA GPAA, therefore, has a critical role to play in assisting GEPF to become trusted brand among all its stakeholders Through the Service Level Agreement (SLA) and the on-going modernisation project, GPAA is better positioned to deliver on its mandate, and performance in relation to the SLA is indicating a positive trend. 19 19
Partnerships: GPAA 20 20
R Billion Partnerships: contributions vs benefits paid 60 50 51 49 45 40 36 40 39 30 20 17 15 18 16 20 20 20 17 23 24 26 26 30 30 29 32 Contributions Benefits Paid 10 0 21 21
Investments & Liabilities 22 22
Actuarial Valuation Results Latest actuarial valuation carried out as at March 2012 o Assets (circa R1.04-trillion) exceeded liabilities (circa R1.01-trillion) o Resulting in a Minimum Funding Level of 102.7% March 2014 actuarial valuation underway Various liability related projects in progress: o Policy enhancements in consultation with the National Treasury (pensions increase policy, transfer policy) 23 23
GEPF s Strategic Asset Allocation Asset class % split Equity 58 Bonds 33 Property 5 Cash 4 Total 100 Geography % split South Africa 90 Africa ex SA 5 International 5 Total 100 24 24
Investments: mandate GEPF investments are mainly managed by the Public Investment Corporation (PIC) PIC manages our equity, bonds, property, unlisted and cash portfolios External investment managers invest a portion of the assets, most of which are monitored by the PIC Investment Mandate governs our relationship with the PIC and other investment managers and sets out: o Strategic Asset Allocation (asset mix) agreed to with the Minister of Finance in fulfilment of section 6(7) of the GEP Law o Investment portfolio structure, risk parameters, 25 benchmarks and fee considerations 25
Investments: Developmental Investing 26
Developmental Investment Sustainable long term returns for GEPF Pillar I Pillar II Pillar III Pillar IV Investments in Economic Infrastructure Investments in Social Infrastructure Investments in Sustainability projects Investments in Enterprise Development and BBBEE 27 27
Investments: growth in assets Accumulated assets as at 31 March 2014 1600 1439 1400 1244 1200 1039 1000 914 800 659 707 640 801 2014 - unaudited 600 546 400 344 416 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 28 28
Click Investment to edit Master Performance title style Fund value as at 31 March 2014 R1.44-trillion (unaudited) Source: Riscura 8/18/2014 29 29
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We do not take our responsibility lightly Thank you. www.gepf.co.za Twitter: @GEPF_SA 31